February 06, 2007

As most readers will know, this case involves an enormous class action pitting seven current and former female Wal-Mart employees against the world’s largest retailer and second largest corporation. The plaintiffs allege sexual discrimination under Title VII. They have sought, and obtained, certification of a class of all women employed at any domestic Wal-Mart retail store in the past 8 years who have been or may have been subjected to Wal-Mart’s allegedly discriminatory pay and management track promotions policies and practices. Everybody agrees that this would be the biggest pay discrimination suit of all time, and during oral argument on the certification motion, Judge Jenkins of California’s Northern District referred to the motion as “historic.” He subsequently granted the motion, at least for the most part. Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137 (N.D. Cal. 2004). The Ninth Circuit affirmed certification 2-1 this morning. More after the jump.

Much of the case is a very workmanlike issue - rule - analysis - conclusion type discussion of whether Judge Jenkins abused his discretion in granting the motion. I really am not close enough to this to know whether and to what extent gender discrimination has been real at Wal-Mart. I haven’t really formed an opinion as to whether this is a class that should be certified. But I have quite a few opinions about how the class action device does and does not serve the interests of both plaintiffs and companies. And on first reading, there were two things that hit me between the eyes.

The first one is the discussion of Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). The plaintiffs had retained a sociologist, who testified that Wal-Mart has and promotes a strong corporate culture that may include gender stereotyping. He further testified that “Wal-Mart’s personnel policies and practices make pay and promotion decisions vulnerable to gender bias.” Wal-Mart attacked this opinion, and the methodology leading up to it, on Daubert grounds. The Ninth Circuit, like the District Court, held that the sociologist’s opinions met FRE 702 standards and Daubert . But just in case it was wrong, it gratuitously offered the following:

Well excuse me all to heck, but I thought Daubertwas based on FRE 701, that class certification motions had to be based on admissible evidence, and that FRE 702 set a single standard for admissibility in all cases. In fact, I went back to see Rule 702 again. Nope, didn’t see anything special there about class certification motions.

The second thing that caught my eye was Judge Kleinfeld’s dissent. Class action abuse is a subject in which I have some interest (and, curiously, that interest seems to be shared in a variety of places – Trial Lawyers for Public Justice, for example). And while I have every expectation that the motives of Brad Seligman and the other members of his superstar team in this litigation are excellent, and this case won't devolve into some high-end version of a coupon settlement scam, I have to wonder. . . . . Should they have the right to eliminate the non-economic damage claims of every member of the class, which they in all likelihood have done here (either explicitly or as a practical matter)? From the defense perspective, isn’t there something really wrong when the stakes are so high that the certification battle is, in effect, the entire war? Isn’t there some real risk that an individual Wal-Mart employee with a really good, really valuable discrimination case is going to get lost in the shuffle? As Judge Kleinfeld sums it up:

“This class certification . . . threatens Wal-Mart’s rights. The district court’s formula to dividing up punitive damages and back pay means that women injured by sex discrimination will have to share any recovery with women who were not. Women who were fired or not promoted for good reasons will take money from Wal-Mart they do not deserve, and get reinstated or promoted as well. This is ‘rough justice’ indeed. ‘Rough’ anyway. Since when were the district courts converted into administrative agencies and empowered to ignore individual justice?”

I suspect this ain’t over. Look for the en banc petition, and then off to SCOTUS.